Important Insights for First-Time Car Insurance Buyers

Purchasing an insurance policy should be your utmost priority when you buy your first automobile. The Motor Vehicles Act, 1988, mandates the purchase of third-party insurance liability for all automobile owners. This insurance comes in handy if you are involved in an accident with a third party. In such situations, your insurance policy covers the damage caused to the third-party’s person and property.

You have to pay the insurance provider an annual premium to receive the policy benefits. Paying the insurance provider to provide monetary aid in the case of an accident lessens your financial burden. To that effect, we have compiled a detailed list of tips and questions that a first-time car insurance buyer can consider before purchasing a policy.

  1. Conduct your research

Buy a car insurance policy after doing your homework. If you are a first-time car insurance buyer, you must know the details, benefits, and limitations of the various policies in the market. With technological innovations, you can easily compare various policies online and discern them based on several parameters such as premium cost, insurance coverage, claim settlement ratio, additional benefits, etc. You can also make use of online car insurance calculators to find a policy that fits your budget.

  1. What is the company’s claim settlement ratio?

The ratio of the total claims paid to the total claims received by an insurance company in a given financial year is known as its motor insurance claim settlement ratio. For your understanding, here is how it is calculated:

Number of claims settled / number of reported claims = claim settlement ratio

  1. What does the policy contract include?

The insurance policy document is a legal contract between the policyholder and the insurance provider. It lays down the terms and conditions of the policy. As such, it contains technical terms that can be hard for most to comprehend. However, it is essential to read the documents thoroughly and clear all doubts before signing the dotted line to avoid confusion in the future. To put you on the right track, here is your policy document checklist: 

  • Who is covered?
  • What is the coverage amount (along with inclusions, exclusions, and limitations)?
  • What is the policy term?
  • What is the premium amount?
  • What is the claim filing procedure?

You can consult an insurance expert to understand the different types of car insurance policies and their terms, conditions, as well as benefits, and gain real insight before purchasing a policy.

You can even make use of a car insurance premium calculator to narrow your search. A useful tool that helps one figure out the quotes offered by the various insurance companies.

  1. What is the policy coverage?

A basic motor insurance policy should cover any damages caused to the other person’s self and property due to a vehicular accident. You can then opt for add-ons such as own damage cover, zero depreciation cover, engine protection cover, accessories cover, etc.

  1. Is there a voluntary deductible?

As the name suggests, a voluntary deductible is not mandatory but is very useful as it helps lower the premium paid on the car insurance. This option allows you to share the repair costs with the insurance provider in the case of a claim, which, in turn, lowers the amount you pay as premium.

  1. What is insured declared value?

The insured declared value (IDV) of your car is the maximum coverage amount that can be claimed under the insurance policy. It is the amount you receive if your vehicle gets stolen or is irreparably damaged. Simply, IDV is the current market value of your car. To know your car’s IDV is essential as it a major factor when it comes to calculating the insurance premium.

  1. Is there a cashless claim?

An insurance company that provides you with a cashless claim option is a good choice when it comes to emergencies. This way, you avoid running around to arrange cash. However, your policy of choice should not solely rely on this factor. Do not overlook other factors despite the obvious advantage of this facility.

You can easily buy third party car insurance online as the process is quick and straightforward.

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